Exhibit 1
STOCK PURCHASE AGREEMENT
by and among
iBEAM BROADCASTING CORPORATION,
XXXXXXXX COMMUNICATIONS, LLC,
XXXXX & COMPANY INCORPORATED,
and
XXXX iBEAM, LLC
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Dated as of June 24, 2001
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions...................................................................1
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK
2.1 Purchase and Sale of Preferred Stock.........................................10
2.2 Payment In-Kind Adjustments..................................................10
2.3 Series A Certificate of Designations.........................................11
2.4 Closing Date.................................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Corporate Existence and Power................................................12
3.2 Authorization; No Contravention..............................................12
3.3 Governmental Authorization; Third Party Consents.............................12
3.4 Binding Effect...............................................................13
3.5 Capitalization...............................................................13
3.6 SEC Reports; Financial Condition.............................................14
3.7 Absence of Change............................................................15
3.8 Litigation...................................................................16
3.9 Compliance with Laws.........................................................16
3.10 No Default or Breach; Contractual Obligations................................17
3.11 Title to Real Property and Assets............................................17
3.12 Taxes........................................................................18
3.13 Employees; Employee Compensation.............................................18
3.14 Labor Relations..............................................................19
3.15 Employee Benefit Plans.......................................................20
3.16 Intellectual Property........................................................21
3.17 Trade Relations..............................................................25
3.18 Insurance....................................................................25
3.19 Environmental Matters........................................................25
3.20 Potential Conflicts of Interest..............................................25
3.21 Anti-takeover................................................................26
3.22 Broker's, Finder's or Similar Fees...........................................26
3.23 Private Offering.............................................................26
3.24 Full Disclosure..............................................................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 Corporate Existence and Power................................................27
4.2 Authorization; No Contravention..............................................27
4.3 Governmental Authorization; Third Party Consents.............................28
4.4 Binding Effect...............................................................28
4.5 Purchase for Own Account.....................................................28
4.6 Legends......................................................................28
4.7 Reliance Upon Purchaser Representations......................................29
4.8 Broker's, Finder's or Similar Fees...........................................29
ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY
5.1 Ordinary Course of Business..................................................29
5.2 Delivery of SEC Reports and Press Releases; Listing; Nasdaq..................32
5.3 Reservation of Common Stock..................................................33
5.4 Books and Records............................................................33
5.5 Inspection...................................................................33
5.6 Board of Directors...........................................................34
5.7 No Solicitation..............................................................34
5.8 Filing of Series A Certificate of Designations...............................34
5.9 Use of Proceeds..............................................................34
ARTICLE VI
AFFIRMATIVE COVENANTS OF
THE PURCHASERS AND THE COMPANY
6.1 Reasonable Best Efforts......................................................35
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to the Obligation of the Primary Purchaser and the Company........36
7.2 Conditions to Obligation of the Primary Purchaser............................37
7.3 Conditions to the Obligation of the Company..................................39
7.4 Conditions to the Obligation of the Company with Respect to the Xxxxx
Purchased Shares.............................................................40
7.5 Conditions to the Obligation of the Company with Respect to the Xxxx
Purchased Shares.............................................................41
7.6 Conditions to the Obligation of the Additional Purchasers....................41
ARTICLE VIII
TERMINATION
8.1 Termination of Agreement.....................................................42
8.2 Effect of Termination........................................................43
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival.....................................................................43
9.2 Indemnification..............................................................43
9.3 Notification and Procedure...................................................44
9.4 Exclusive Remedy.............................................................45
ARTICLE X
MISCELLANEOUS
10.1 Notices......................................................................46
10.2 Successors and Assigns; No Third Party Beneficiaries.........................47
10.3 Amendment and Waiver.........................................................48
10.4 Counterparts.................................................................48
10.5 Headings.....................................................................48
10.6 Governing Law................................................................49
10.7 Severability.................................................................49
10.8 Entire Agreement.............................................................49
10.9 Expenses.....................................................................49
10.10 Publicity; Confidentiality...................................................49
10.11 Further Assurances...........................................................50
EXHIBITS
A Form of Consent and Standstill Agreement
B Form of Registration Rights Agreement
C Form of Series A Certificate of Designations
D Form of Service Agreements
E Form of Stockholders Agreement
F Form of Confidentiality, Invention Assignment and Noncompetition
Agreement
G Form of Confidentiality, Invention Assignment and Nonsolicitation
Agreement
H Form of Retention Incentive Agreement
I Form of Retention Plan
J Form of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP Opinion
K Form of Company's General Counsel Opinion
L Form of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 24, 2001 (this
"Agreement"), by and among iBeam Broadcasting Corporation, a Delaware
corporation (the "Company"), Xxxxxxxx Communications, LLC, a Delaware
limited liability company (the "Primary Purchaser"), Xxxxx & Company
Incorporated, a New York corporation ("Xxxxx") and Xxxx iBeam, LLC, an
Illinois limited liability company ("Xxxx", and together with Xxxxx, the
"Additional Purchasers").
WHEREAS, upon the terms and conditions set forth in this
Agreement, the Company proposes to issue and sell an aggregate of 2,400,939
shares, par value $.0001 per share, of Series A Convertible Preferred
Stock of the Company (the "Series A Preferred Stock"); and
WHEREAS, each share of Series A Preferred Stock is
convertible (subject to adjustment) into shares of common stock, par value
$.0001 per share, of the Company (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth herein and for good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
As used in this Agreement, and unless the context
requires otherwise, the following terms have the meanings indicated:
"Additional Purchasers" has the meaning set forth in the
preamble to this Agreement.
"Affiliate" shall mean any Person who is an "affiliate"
as defined in Rule 12b-2 of the General Rules and Regulations of the
Exchange Act.
"Agreement" means this Agreement, as the same may be
amended, supplemented or modified in accordance with the terms hereof.
"Xxxxx" has the meaning set forth in the preamble to this
Agreement.
"Xxxxx Purchase Price" has the meaning set forth in
Section 2.1 of this Agreement.
"Xxxxx Purchased Shares" has the meaning set forth in
Section 2.1 of this Agreement.
"Board of Directors" means the Board of Directors of the
Company.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in the State of New York are
authorized or required by law or executive order to close.
"Bylaws" means the bylaws of the Company in effect on the
Closing Date, as the same may be amended from time to time.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company as the same may be amended from time to time.
"Claims" has the meaning set forth in Section 3.8 of this
Agreement.
"Closing" has the meaning set forth in Section 2.4 of
this Agreement.
"Closing Date" has the meaning set forth in Section 2.4
of this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute thereto.
"Commission" means the U. S. Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Common Stock" has the meaning set forth in the recitals
to this Agreement.
"Company" has the meaning set forth in the preamble to
this Agreement.
"Company Privacy Policy" means the privacy policy posted
on the Company Website.
"Company Website" means the Internet Website located at
the URL address xxx.xxxxx.xxx and all other Internet Websites owned and/or
controlled by the Company.
"Condition of the Company" means the assets, business,
prospects, results of operations or condition (financial or otherwise) of
the Company and its Subsidiaries, taken as a whole.
"Consent and Standstill Agreement" shall mean the Consent
and Standstill Agreement in the form set forth in Exhibit A.
"Contractual Obligations" means, as to any Person, any
provisions of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument to which such Person is a party or by which it or any of its
property is bound.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any
nonregistered copyrights.
"Cure Period" has the meaning set forth in Section 2.2 of
this Agreement.
"Customer Information" means any and all of the
personally identifiable and non-personally identifiable customer
information the Company receives through the Company Website or otherwise.
"Disclosure Letter" the disclosure letter delivered by
the Company to the Purchasers pursuant to this Agreement.
"Environmental Laws" means federal, state, local and
foreign laws, principles of common laws, civil laws, regulations, and
codes, as well as orders, decrees, judgments or injunctions, issued,
promulgated, approved or entered thereunder relating to pollution,
protection of the environment or public health and safety.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
3.15(a) of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder.
"Existing Investors' Rights Agreement" has the meaning
set forth in Section 6.1 of this Agreement.
"Failure Notice" has the meaning set forth in Section 2.2
of this Agreement.
"Financial Statements" has the meaning set forth in
Section 3.6(b) of this Agreement.
"GAAP" means United States generally accepted accounting
principles in effect from time to time.
"Governmental Authority" means the government of any
nation, state, city, locality or other political subdivision thereof, any
entity or Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"including" means including but not limited to the items
following such term, unless the context clearly requires otherwise.
"Indebtedness" of any Person at any date shall include
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, including earn-out or similar
contingent purchase amounts, (ii) any other indebtedness of such Person
which is evidenced by a note, mortgage, bond, debenture or similar
instrument, (iii) all obligations of such Person under capitalized leases,
(iv) all payments made or to be made pursuant to sale-leaseback
transactions, (v) all payments made or to be made pursuant to a non-compete
payment obligation, change of control payment obligation, and severance and
retention obligations, and (vi) all guarantees by such Person of
obligations of others whether or not such Person has assumed or otherwise
become directly liable for the payment thereof.
"Indemnified Party" has the meaning set forth in Section
9.2 of this Agreement.
"Intellectual Property" has the meaning set forth in
Section 3.16 of this Agreement.
"Internet Assets" means any Internet domain names and
other computer user identifiers and any rights in and to sites on the World
Wide Web, including rights in and to any text, graphics, audio and video
files and html or other code incorporated in such sites.
"License Agreements" has the meaning set forth in Section
3.16 of this Agreement.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien or preference, priority, right
or other security interest or preferential arrangement of any kind or
nature whatsoever.
"Losses" has the meaning set forth in Section 9.2 of this
Agreement.
"Xxxx" has the meaning set forth in the preamble to this
Agreement.
"Xxxx Purchase Price" has the meaning set forth in
Section 2.1 of this Agreement.
"Xxxx Purchased Shares" has the meaning set forth in
Section 2.1 of this Agreement.
"NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotation System.
"Orders" has the meaning set forth in Section 3.2 of this
Agreement.
"Outside Date" has the meaning set forth in Section 8.1
of this Agreement.
"Payment In-Kind Adjustment" shall mean an amount equal
to (x) Ten Million Dollars ($10,000,000), minus (y) the value of the
services which the Primary Purchaser or its Affiliates performed pursuant
to the Service Agreements from the date of the Service Agreements until the
Payment In-Kind Adjustment Date.
"Payment In-Kind Adjustment Date" shall mean the date on
which the payment of the Payment In-Kind Adjustment occurs.
"Patents" means any foreign or United States patents and
patent applications, including any divisions, continuations, continuations
in part, substitutions or reissues thereof, whether or not patents are
issued on such applications and whether or not such applications are
modified, withdrawn or resubmitted.
"Permits" has the meaning set forth in Section 3.9(b) of
this Agreement.
"Permitted Liens" means (i) Liens disclosed in Section
1.1(a) of the Disclosure Letter; (ii) Liens disclosed on the Financial
Statements; (iii) Liens for taxes, assessments, duties and similar charges
that are not yet due or are being contested in good faith; (iv) mechanic's,
materialman's, carrier's, repairer's and other similar Liens arising or
incurred in the ordinary course of business consistent with past practices,
the existence of which does not, and would not reasonably be expected to
materially impair the value or use and enjoyment of the asset subject to
such Lien, (v) Liens incurred in the ordinary course of business consistent
with past practices since the March 31, 2001, the existence of which does
not, and would not reasonably be expected to materially impair the value or
use and enjoyment of the asset subject to such Lien, or (vi) other Liens
that do not secure payment of Indebtedness for borrowed money, the
existence of which does not, and would not reasonably be expected to,
materially impair the value or use and enjoyment of the asset subject to
such Lien.
"Person" means any individual, firm, corporation,
partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, limited liability company, Governmental
Authority or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity.
"Plans" has the meaning set forth in Section 3.15 of this
Agreement.
"Pre-Closing Period" has the meaning set forth in Section
5.1 of this Agreement.
"Preferred Stock" shall mean the Series A Preferred Stock.
"Primary Purchaser" has the meaning set forth in the
preamble to this Agreement.
"Primary Purchaser Purchased Shares" has the meaning set
forth in Section 2.1 of this Agreement.
"Primary Purchaser Cash Payment" has the meaning set
forth in Section 2.1 of this Agreement.
"Proprietary Software" has the meaning set forth in
Section 3.16(b) of this Agreement.
"Purchased Shares"shall mean the Primary Purchaser
Purchased Shares, the Xxxxx Purchased Shares and the Xxxx Purchased Shares.
"Purchasers" shall mean the Primary Purchaser together
with the Additional Purchasers.
"Registration Rights Agreement" means the Registration
Rights Agreement in the form attached hereto as Exhibit B.
"Requirements of Law" means, as to any Person, any law,
statute, treaty, rule, regulation, right, qualification, license or
franchise or determination of an arbitrator or a court or other
Governmental Authority or stock exchange, in each case applicable or
binding upon such Person or any of its property or to which such Person or
any of its property is subject or pertaining to any or all of the
transactions contemplated or referred to herein.
"SEC Reports" with respect to any Person means all forms,
reports, statements and other documents (including exhibits, annexes,
supplements and amendments to such documents) required to be filed by it,
or sent or made available by it to its security holders, under the Exchange
Act, the Securities Act, any national securities exchange or quotation
system or comparable Governmental Authority since the date of such Person's
initial public offering.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
"Series A Certificate of Designations" means the
Certificate of Designations with respect to the Series A Preferred Stock
adopted by the Board of Directors and duly filed with the Secretary of
State of the State of Delaware on or before the Payment Date substantially
in the form attached hereto as Exhibit C.
"Series A Preferred Stock" has the meaning set forth in
the recitals to this Agreement.
"Service Agreements" means the Service Agreements between
the Company and the Primary Purchaser in the forms attached hereto as
Exhibit D.
"Software" means any computer software programs,
including, without limitation, any computer software programs that
incorporate and run the Company's pricing models, formulas and algorithms,
source code, object code, data, databases, compilations and documentation,
including user manuals and training materials.
"Stock Equivalents" means any security or obligation that
is by its terms convertible into or exchangeable for shares of common stock
or other capital stock or securities of the Company, and any option,
warrant or other subscription or purchase right with respect to common
stock or such other capital stock or securities.
"Stockholders Agreement" means the Stockholders Agreement
among the Primary Purchaser, the Additional Purchasers and the Company in
the form attached hereto as Exhibit E.
"Stock Option Plan" means the Company's 1998 Stock Plan,
the Company's 2000 Stock Option Plan, the Company's 2000 Director Plan, the
Company's 2000 B Stock Option Plan, the Company's 2000 Employee Stock
Purchase Plan, the NextVenue, Inc. Amended and Restated 1999 Stock Option
Plan and the xxxxxxxx.xxx Inc. 1999 Stock Option Plan, pursuant to which up
to 33,195,990 shares of restricted stock and options to purchase shares of
Common Stock may be issued to officers, directors, employees and
consultants of the Company.
"Subsidiaries" means, as of the relevant date of
determination, with respect to any Person, a corporation or other Person of
which 50% or more of the voting power of the outstanding voting equity
securities or 50% or more of the outstanding economic equity interest is
held, directly or indirectly, by such Person. Unless otherwise qualified,
or the context otherwise requires, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"Tax" or "Taxes" have the meaning set forth in Section
3.12 of this Agreement.
"Threshold" has the meaning set forth in Section 9.2(b)
of this Agreement.
"Trade Secrets" means any confidential information trade
secrets, research records, processes, procedures, manufacturing formulas,
technical know-how, technology, blue prints, designs, plans, models and
methodologies (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Trademarks" means any foreign or U.S. trademarks,
service marks, trade dress, trade names, brand names, designs and logos,
corporate names, product or service identifiers, and general intangibles of
like nature whether registered or unregistered, together with all of the
goodwill relating thereto and all registrations and applications for
registration thereof.
"Transaction Documents" means, collectively, this
Agreement, the Registration Rights Agreement, the Stockholders Agreement,
the Service Agreements, the Consent and Standstill Agreements, the Series A
Certificate of Designations and the other ancillary agreements entered into
in connection with the foregoing.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK
2.1 Purchase and Sale of Preferred Stock.
(a) Subject to the terms and conditions herein,
the Company agrees to issue and sell to the Primary Purchaser, and the
Primary Purchaser agrees to purchase from the Company, at the Closing Date,
1,800,704 shares of Series A Preferred Stock (the "Primary Purchaser
Purchased Shares") for the aggregate purchase price of Thirty Million
Dollars ($30,000,000) comprised of (i) Twenty Million Dollars ($20,000,000)
in cash (the "Primary Purchaser Cash Payment"), and (ii) services valued at
Ten Million Dollars ($10,000,000) pursuant to the Service Agreements.
(b) Subject to the terms and conditions herein,
the Company agrees to issue and sell to Xxxxx, and Xxxxx agrees to purchase
from the Company, at the Closing Date, 480,188 shares of Series A Preferred
Stock (the "Xxxxx Purchased Shares") for the aggregate purchase price of
Eight Million Dollars ($8,000,000) in cash (the "Xxxxx Purchase Price").
(c) Subject to the terms and conditions herein,
the Company agrees to issue and sell to Xxxx, and Xxxx agrees, to purchase
from the Company, at the Closing Date, 120,047 shares of Series A Preferred
Stock (the "Xxxx Purchased Shares") for the aggregate purchase price of Two
Million Dollars ($2,000,000) in cash (the "Xxxx Purchase Price").
2.2 Payment In-Kind Adjustments. In the event that the
Primary Purchaser materially fails to perform its obligations under the
Service Agreements, except in the event that such failure is principally
the result of the Company's inability or unwillingness to accept the
services, and the Primary Purchaser has not cured such failure within the
cure period provided under the applicable Service Agreement (the "Cure
Period") after receiving written notice thereof from the Company (the
"Failure Notice"), the Primary Purchaser will pay the Company in cash an
amount equal to the Payment In-Kind Adjustment, such payment to be made
within 10 Business Days of the end of the Cure Period by wire transfer of
immediately available funds to a bank account designated by the Company in
writing in the Failure Notice.
2.3 Series A Certificate of Designations. The Series A
Preferred Stock shall have the preferences and rights set forth in the
Series A Certificate of Designations.
2.4 Closing Date.
(a) Upon the terms and subject to the conditions
set forth herein, the closing of the purchase and sale of the Purchased
Shares (the "Closing") will take place on the first Business Day after
satisfaction or waiver (subject to applicable law) of the conditions herein
(excluding those conditions that by their nature cannot be satisfied until
the Closing Date) unless another time or date is agreed to in writing by
the parties hereto (the actual time and date of the Closing being referred
to as the "Closing Date"). The Closing shall be held at the offices of
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX
00000, unless another place is agreed to in writing by the parties hereto.
(b) On the Closing Date, the Company shall
deliver to (i) the Primary Purchaser certificates in definitive form and
registered in the name of the Primary Purchaser, representing the Primary
Purchaser Purchased Shares against delivery by the Primary Purchaser to the
Company of (A) the Primary Purchaser Cash Payment therefor by wire transfer
of immediately available funds, and (B) execution of the Service Agreements
by the Primary Purchaser, (ii) Xxxxx certificates in definitive form and
registered in the name of Xxxxx, representing the Xxxxx Purchased Shares
against delivery by Xxxxx to the Company of the Xxxxx Purchase Price by
wire transfer of immediately available funds, and (iii) Xxxx certificates
in definitive form and registered in the name of Xxxx, representing the
Xxxx Purchased Shares against delivery by Xxxx to the Company of the Xxxx
Purchase Price by wire transfer of immediately available funds.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the
Purchasers as follows:
3.1 Corporate Existence and Power. Except as set forth in
Section 3.1 of the Disclosure Letter, the Company and each of its
Subsidiaries: (a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware; (b) has all
requisite power and authority to own, lease, license and operate its
properties and assets and to carry on its business as now conducted and as
presently proposed to be conducted; and (c) is duly qualified as a foreign
corporation, licensed and in good standing under the laws of each
jurisdiction in which its ownership, lease or operation of property or the
conduct of its business requires such qualification and in which the
failure to so qualify would have a material adverse effect on the Condition
of the Company. The Company has all corporate power and authority to
execute, deliver and perform its obligations under this Agreement and each
of the other Transaction Documents to which it is party.
3.2 Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement and each of the
other Transaction Documents to which it is party and the transactions
contemplated hereby and thereby (i) have been duly authorized by all
necessary corporate actions of the Company; (ii) do not contravene the
terms of the Certificate of Incorporation or the Bylaws; (iii) do not
violate, conflict with or result in any breach, default or contravention of
(or with due notice or lapse of time or both would result in any breach,
default or contravention of), or the creation of any Lien under, any
Contractual Obligation of the Company or any Requirement of Law applicable
to the Company; and (iv) do not violate any judgment, injunction, writ,
award, decree or order of any nature (collectively, "Orders") of any
Governmental Authority against, or binding upon, the Company, except in the
cases of clauses (iii) and (iv) for such violations, conflicts, breaches or
defaults which would not have a material adverse effect on the Condition of
the Company.
3.3 Governmental Authorization; Third Party Consents.
Except as set forth in Section 3.3 of the Disclosure Letter, no material
approval, consent, compliance, exemption, authorization or other action by,
or notice to, or filing with, any Governmental Authority or any other
Person, and no lapse of a waiting period under a Requirement of Law, is
necessary or required in connection with the execution, delivery or
performance (including the sale, issuance and delivery of the Purchased
Shares) by, or enforcement against, the Company of this Agreement, each of
the other Transaction Documents to which it is a party or the transactions
contemplated hereby and thereby.
3.4 Binding Effect. This Agreement has been, and as of
the Closing Date each of the other Transaction Documents to which the
Company is party will have been, duly executed and delivered by the
Company, and this Agreement constitutes, and as of the Closing Date each of
the other Transaction Documents will constitute, the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or
in equity).
3.5 Capitalization.
(a) As of June 19, 2001, the authorized capital
stock of the Company consists of (i) 413,000,000 shares of Common Stock, of
which 127,396,741 are issued and outstanding and (ii) 10,000,000 shares of
undesignated "blank check" preferred stock. As of the date hereof, the
aggregate number of shares of stock and options to purchase shares of
Common Stock that may be issued under the Stock Option Plan is 33,195,990,
of which 18,534,467 are issued and outstanding. Except as set forth in
Section 3.5(a) of the Disclosure Letter and except for the securities to be
issued under this Agreement, there are no options, warrants, conversion
privileges, subscription or purchase rights or other rights presently
outstanding to purchase or otherwise acquire (i) any authorized but
unissued, unauthorized or treasury shares of the Company's capital stock,
(ii) any Stock Equivalents or (iii) any other securities of the Company;
and there are no commitments, contracts, agreements, arrangements or
understandings by the Company to issue any shares of the Company's capital
stock or any Stock Equivalents or other securities of the Company. The
Purchased Shares are duly authorized, and when issued and sold to the
Purchasers after payment therefor, will be validly issued, fully paid and
non-assessable, will be issued in compliance with the registration and
qualification requirements of applicable federal and state securities laws
or pursuant to valid exemptions therefrom and will be free and clear of all
other Liens. The shares of Series A Preferred Stock when issued in
compliance with the provisions of the Series A Certificate of Designations,
will be validly issued, fully paid and non-assessable and not subject to
any preemptive rights or similar rights that have not been satisfied and
will be free and clear of all other Liens. All of the issued and
outstanding shares of Common Stock are duly authorized, validly issued,
fully paid and nonassessable, and were issued in compliance with the
registration and qualification requirements of applicable federal and state
securities laws.
(b) Section 3.5(b) of the Disclosure Letter sets
forth, as of the Closing Date, a true and complete list of each of the
Subsidiaries of the Company. Except as set forth in Section 3.5(b) of the
Disclosure Letter, the Company owns all of the issued and outstanding
capital stock of the Subsidiaries, free and clear of all Liens. All of such
shares of capital stock are duly authorized, validly issued, fully paid and
non-assessable, and were issued in compliance with the registration and
qualification requirements of applicable federal and state securities laws.
Except as set forth in Section 3.5(b) of the Disclosure Letter, there are
no options, warrants, conversion privileges, subscription or purchase
rights or other rights presently outstanding, to purchase or otherwise
acquire any authorized but unissued shares, unauthorized or treasury shares
of capital stock or other securities of, or any proprietary interest in,
any of the Subsidiaries, and there is no outstanding security of any kind
convertible into or exchangeable for such shares or proprietary interest.
3.6 SEC Reports; Financial Condition.
(a) The Company has filed all SEC Reports and
has made available to the Purchasers each SEC Report. The SEC Reports of
the Company, including any financial statements or schedules included or
incorporated therein by reference, (i) comply in all material respects with
the requirements of the Exchange Act or the Securities Act or both, as the
case may be, applicable to those SEC Reports and (ii) did not at the time
they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated or necessary in order to make
the statements made in those SEC Reports, in light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated balance sheets of
the Company and the related statements of income, stockholders' equity and
cash flow, together with the notes thereto, which are included in or
incorporated by reference into the SEC Reports of the Company (the
"Financial Statements") fairly present, in all material respects, the
consolidated financial position of the Company as of the respective dates
thereof, and the consolidated results of operations and cash flows of the
Company as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto and
subject, in the case of unaudited quarterly financial statements, to normal
year-end audit adjustments.
(c) Except as disclosed in the Financial
Statements or in Section 3.6 of the Disclosure Letter, neither the Company
nor any of its Subsidiaries has any material liability or obligation of any
nature, (including, without limitation, any direct or indirect
Indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, liquidated or unliquidated, secured or unsecured).
Section 3.6 of the Disclosure Letter sets forth a list of all liabilities
and obligations (including Indebtedness) of the Company and its
Subsidiaries to any Person or group of related Persons, whether or not
disclosed in Financial Statements, for amounts in excess of $100,000.
3.7 Absence of Change. Since March 31, 2001, except as
fully disclosed in SEC Reports filed on or before the date hereof or as set
forth in Section 3.7 of the Disclosure Letter, there has not been:
(a) any material adverse change in the Condition
of the Company;
(b) any satisfaction, discharge or payment of
any liability or obligation (including Indebtedness) by the Company, except
in the ordinary course of business and that is not material to the
Condition of the Company;
(c) any change to a material Contractual
Obligation by which the Company or any of its assets is bound or subject;
(d) any amendment or modification to any Plan or
adoption of any compensation or benefit agreement, plan or arrangement for
the benefit of any employee, director, consultant or stockholder of the
Company and its Subsidiaries or any increase in the compensation payable to
any such individual;
(e) any sale, assignment or transfer of any
patents, trademarks, copyrights, trade secrets or other intangible assets
and Intellectual Property;
(f) any resignation or termination of employment
of any officer or key employee of the Company;
(g) any loans or guarantees made by the Company
to or for the benefit of its officers or directors, or any members of their
immediate families, other than advances made in the ordinary course of its
business;
(h) any material transaction in which the
Company participated that is outside the ordinary course of business,
including any declaration, setting aside or payment or other distribution
with respect to any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any such stock by
the Company;
(i) any material change in the Company's
accounting principles or practice except as required by reason of a change
in GAAP; or
(j) any arrangement or commitment by the Company
to do any of the things described in this Section 3.7.
3.8 Litigation. Except as set forth in SEC Reports filed
on or before the date hereof or in Section 3.8 of the Disclosure Letter,
there are no material actions, suits, proceedings, claims, complaints,
disputes, controversies, arbitrations or investigations (collectively,
"Claims") pending or, to the knowledge of the Company, threatened, at law,
in equity, in arbitration or before any Governmental Authority against the
Company or any of its Subsidiaries.
3.9 Compliance with Laws. Except as set forth in SEC
Reports filed on or before the date hereof or as set forth in Section 3.9
of the Disclosure Letter:
(a) The Company and each of its Subsidiaries is,
and since May 18, 2000 has been, in compliance in all material respects
with all Requirements of Law and all Orders issued by any court or
Governmental Authority against the Company or its Subsidiaries, as
applicable. There is no existing or, to the Company's knowledge, proposed
Requirement of Law that would reasonably be expected to prohibit or
restrict the Company from conducting its business, or otherwise materially
adversely affect the Condition of the Company.
(b) (i) The Company and each of its Subsidiaries
have all material licenses, permits and approvals of any Governmental
Authority (collectively, "Permits") that are necessary for the conduct of
their respective businesses as presently conducted, (ii) such Permits are
in full force and effect, and (iii) no violations are or have been recorded
in respect of any Permit.
(c) No material expenditure is presently
required by the Company to comply with any existing Requirement of Law or
Order.
3.10 No Default or Breach; Contractual Obligations.
Except as disclosed in SEC Reports filed on or before the date hereof or in
Section 3.10 of the Disclosure Letter, the Company and its Subsidiaries do
not have any Contractual Obligation (whether written or oral) that is
material to the Condition of the Company. All of the Contractual
Obligations to which the Company or one of its Subsidiaries is a party
(whether written or oral) that are material to the Condition of the
Company, are valid, subsisting, in full force and effect and binding upon
the Company or its Subsidiary, as the case may be, and the other parties
thereto. Except as set forth in Section 3.10 of the Disclosure Letter, the
Company has not received notice of default and is not in default under, or
with respect to, any such Contractual Obligation nor does any condition
exist that with notice or lapse of time or both would constitute a default
by the Company or its Subsidiaries thereunder. To the knowledge of the
Company, no other party to any such Contractual Obligation is in default
thereunder.
3.11 Title to Real Property and Assets.
(a) The Company and each of its Subsidiaries has
good, record, and marketable title in fee simple to, or holds interests as
lessee under leases in full force and effect in, all real property used in
connection with its business or otherwise owned or leased by it.
(b) The Company and each of its Subsidiaries
owns and has good, valid, and marketable title to all of its properties
(excluding real property, addressed in Section 3.11(a)) and assets used in
its business and reflected as owned on the Financial Statements or so
described in the Disclosure Letter, in each case free and clear of all
Liens, except for Permitted Liens.
3.12 Taxes. The Company has paid (i) all federal taxes,
(ii) all state, local and foreign income taxes, and (iii) all material
state, local and foreign other taxes, including, without limitation,
estimated taxes, excise and value added taxes, sales taxes, use taxes,
gross receipts taxes, franchise taxes, employment and payroll related
taxes, property (real or personal) taxes, import duties, windfall or excess
profits taxes, withholding taxes, and any other tax, charge, or levy
imposed by any Governmental Authority (hereinafter the taxes collectively
referred to in clauses (i), (ii), and (iii), "Taxes" or, individually, a
"Tax") which have come due and are required to be paid by it through the
date hereof, and all deficiencies or other additions to Tax, interest and
penalties owed by it in connection with any such Taxes, other than Taxes
being disputed by the Company in good faith for which adequate reserves
have been made in accordance with GAAP. The Company has timely filed or
caused to be filed all returns and other reports for Taxes that it is
required to file on and through the date hereof (including all applicable
extensions), and all such Tax returns are accurate and complete. With
respect to all Tax returns of the Company, (i) there is no unassessed Tax
deficiency proposed or, to the knowledge of the Company, threatened against
the Company and (ii) no audit is in progress with respect to any return for
Taxes, no extension of time is in force with respect to any date on which
any return for Taxes was or is to be filed and no waiver or agreement is in
force for the extension of time for the assessment or payment of any Tax.
All provisions for Tax liabilities of the Company with respect to the
Financial Statements have been made in accordance with GAAP consistently
applied, and all liabilities for Taxes of the Company attributable to
periods prior to or ending on the Closing Date have been adequately
provided for on the Financial Statements.
3.13 Employees; Employee Compensation.
(a) The Company has complied in all material
respects with all applicable state and federal equal employment opportunity
and other laws related to employment and employment practices, terms and
conditions of employment, wages, hours of work, and occupational safety and
health. To the Company's knowledge, no charges or investigations with
respect to the Company or its Subsidiaries are pending or threatened before
the Equal Employment Opportunity Commission, or any other state or federal
agency responsible for the prevention of unlawful employment practices.
Except as set forth in Section 3.13(a) of the Disclosure Letter, to the
Company's knowledge, there are no Claims pending or threatened regarding
the breach of any express or implied contract of employment, any law or
regulation governing employment or the termination thereof, or any other
discriminatory, wrongful or tortious conduct by the Company or its
Subsidiaries in connection with the employment relationship. To the
Company's knowledge, no employee of the Company or any of its Subsidiaries
is or will be in violation of any judgment, decree or order, or any term of
any employment contract, patent disclosure agreement, or other contract or
agreement relating to the relationship of any such employee with the
Company or any of its Subsidiaries or any other party because of the nature
of the business conducted by the Company or any of its Subsidiaries or to
the use by the employee of his or her best efforts with respect to such
business. The Company and its Subsidiaries are and have been in compliance
with the requirements of the Worker Adjustment and Retraining Notification
Act of 1988 and any similar state or local law governing layoffs and/or
employment termination.
(b) The SEC Reports filed on or before the date
hereof, accurately disclose information required to be disclosed therein
(including compensation data) concerning all current directors, officers,
material employees and consultants of the Company.
3.14 Labor Relations. Except as set forth in Section 3.14
of the Disclosure Letter, (i) the Company is not engaged in any unfair
labor practice as defined in the National Labor Relations Act, (ii) there
is (A) no unfair labor practice charge or complaint against the Company or
its Subsidiaries pending or threatened before the National Labor Relations
Board or any similar agency, (B) no grievance or arbitration proceeding
arising out of or under collective bargaining agreements pending or, to the
knowledge of the Company, threatened against the Company or its
Subsidiaries, and (C) no strike, labor dispute, slowdown, stoppage or
lockout pending or, to the knowledge of the Company, threatened against the
Company or its Subsidiaries, (iii) the Company is not a party to any
collective bargaining agreement or similar contract, (iv) there is no union
representation question existing with respect to the employees of the
Company, and (v) none of the Company employees are represented by any labor
organization and no union organizing activities are taking place. Except as
set forth in Section 3.14 of the Disclosure Letter, to the knowledge of the
Company, no officer or key employee, or any group of key employees, intends
to terminate his, her or their employment with the Company. Except as set
forth in Section 3.14 of the Disclosure Letter, the Company has not taken
any steps to terminate the employment of any officer, key employee or group
of key employees, nor does it have any plans to do so.
3.15 Employee Benefit Plans. (a) Section 3.15(a) of the
Disclosure Letter contains a true and complete list of each "welfare" plan,
fund or program (within the meaning of Section 3(1) of ERISA), each
"pension" plan, fund or program (within the meaning of Section 3(2) of
ERISA), and each other material employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained,
contributed to or required to be contributed to by the Company or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), that
together with the Company would be deemed a "single employer" within the
meaning of Section 4001(b) of ERISA, or to which the Company or an ERISA
Affiliate is party, for the benefit of any current or former employee,
consultant or director of the Company and its Subsidiaries (the "Plans").
No Plan is subject to Title IV or Section 302 of ERISA.
(b) With respect to each Plan, the Company has
heretofore made available to the Purchasers true and complete copies of
each of the following documents, as applicable: (A) a copy of the Plan and
any amendments thereto; (B) a copy of the most recent annual report and
actuarial report; (C) a copy of the most recent summary Plan description;
(D) a copy of the trust or other funding agreement and the latest financial
statements thereof; and (E) the most recent determination letter received
from the Internal Revenue Service with respect to each Plan intended to
qualify under Section 401 of the Code.
(c) No liability under Title IV or Section 302
of ERISA has been incurred by the Company or any ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring any such
liability, other than liability for premiums due the Pension Benefit
Guaranty Corporation (which premiums have been paid when due).
(d) Neither the Company, its Subsidiaries, any
Plan, any trust created thereunder, nor any trustee or administrator
thereof has engaged in a transaction in connection with which the Company,
its Subsidiaries, any Plan, any such trust, or any trustee or administrator
thereof, or any party dealing with any Plan or any such trust could be
subject to either a material civil penalty assessed pursuant to Section 409
or 502(i) of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code.
(e) Each Plan has been operated and administered
in all material respects in compliance with its terms and applicable law,
including but not limited to ERISA and the Code. All contributions required
to be made with respect to any Plan on or prior to the Closing Date have
been timely made. There are no pending, threatened or anticipated Claims by
or on behalf of any Plan, by any employee or beneficiary covered under any
such Plan, or otherwise involving any such Plan (other than routine claims
for benefits).
(f) Each Plan intended to be "qualified" within
the meaning of Section 401(a) of the Code has received a determination
letter from the Internal Revenue Service stating that it is so qualified,
and no event has occurred since the date of such letter that would
adversely affect such qualification.
(g) No Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Companies or their Subsidiaries for
periods extending beyond their retirement or other termination of service,
other than coverage mandated by applicable law.
(h) The shareholder approval or consummation of
the transactions contemplated by this Agreement will not, either alone or
in combination with another event (i) entitle any current or former
employee, officer or director of the Company or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, officer or director. No amounts payable under the Plans will
constitute an "excess parachute payment" (as defined in Section 280G of the
Code) with respect to the transactions contemplated by this Agreement.
3.16 Intellectual Property.
(a) Section 3.16(a) of the Disclosure Letter
sets forth, for all Intellectual Property owned by the Company, a complete
and accurate list of all U.S. and foreign: (i) Patents; (ii) registered
Trademarks and material unregistered Trademarks; and (iii) registered
Copyrights and material unregistered Copyrights.
(b) Section 3.16(b) of the Disclosure Letter
lists all contracts for Software that is licensed, leased or otherwise used
by the Company (other than off-the-shelf Software), and all Software that
is owned by the Company ("Proprietary Software"), and identifies which
Software is owned, licensed, leased, or otherwise used, as the case may be.
(c) Section 3.16(c) of the Disclosure Letter
sets forth a complete and accurate list of all agreements (whether verbal
or written) granting or obtaining any right to use or practice any rights
under any Intellectual Property, to which the Company is a party or
otherwise bound, as licensee or licensor thereunder, including, without
limitation, license agreements, settlement agreements and covenants not to
xxx (collectively, the "License Agreements").
(d) (i) The Company is the owner of all, or has
a license or right to use, sell and license all Copyrights, Patents, Trade
Secrets, Trademarks, Internet Assets, Software and other proprietary rights
that are used in connection with its business as presently conducted or
contemplated in its business plan, free and clear of all Liens
(collectively, "Intellectual Property").
(ii) Except as set forth in Section 3.16(d)(ii)
of the Disclosure Letter, no litigation is pending, or to the
knowledge of the Company threatened, against the Company relating
to Intellectual Property.
(iii) To the knowledge of the Company, any
Intellectual Property owned or used by the Company has been duly
maintained, is valid and subsisting, in full force and effect and
has not been cancelled, expired or abandoned, nor does it infringe
upon or otherwise violate any intellectual property rights of
others.
(iv) Except as set forth in Section 3.16(d)(iv)
of the Disclosure Letter, the Company has not received notice from
any third party regarding any actual or potential infringement or
misappropriation by the Company of any intellectual property of
such third party, and the Company has no knowledge of any basis
for such a claim against the Company.
(v) Except as set forth in Section 3.16(d)(v) of
the Disclosure Letter, the Company has not received notice from
any third party regarding any assertion or claim challenging the
validity of any Intellectual Property owned or used by the Company
and the Company has no knowledge of any basis for such a claim.
(vi) None of the Trademarks the Company
currently uses and none of the Trademarks listed in Section
3.16(a) of the Disclosure Letter for which the Company has
obtained or applied for a registration have been abandoned. To the
knowledge of the Company, there has been no prior use of such
Trademarks by any third party that would confer upon said third
party superior rights in such Trademarks. The Company has taken
reasonable steps to maintain the validity of such Trademarks.
(vii) Except as set forth in Section
3.16(d)(vii) of the Disclosure Letter, to the knowledge of the
Company, no Person is misappropriating, diluting, infringing upon
or otherwise violating the Intellectual Property rights of the
Company.
(e) No former employer of any employee of the
Company, and no current or former client of any consultant of the Company,
has made a claim against the Company or, to the knowledge of the Company,
against any other Person, that such employee or such consultant is
utilizing Intellectual Property of such former employer or client.
(f) (i) Except as set forth in Section
3.16(f)(i) of the Disclosure Letter, the Company is not a party to or bound
by any license or other agreement requiring the payment by the Company of
any royalty payment, excluding such agreements relating to software
licensed for use solely on the computers of the Company.
(ii) The Company has not licensed or sublicensed
its rights in any Intellectual Property, or received or been
granted any such rights, other than pursuant to the License
Agreements.
(iii) The Company has substantially performed
all obligations imposed upon it under the License Agreements and
the License Agreements are valid and binding obligations of the
Company, enforceable in accordance with their terms, and there
exists no event or condition that will result in a violation or
breach of, or constitute a default by the Company or, to the best
knowledge of the Company, the other party thereto, under any such
License Agreement.
(g) The Company takes reasonable measures to
protect the confidentiality of Trade Secrets. No Trade Secret of the
Company has been disclosed or authorized to be disclosed to any third party
other than pursuant to a written nondisclosure agreement that reasonably
protects the Company's proprietary interests in and to such Trade Secrets,
or pursuant to the filing of patent applications related to such Trade
Secrets;
(h) (i) It is the policy of the Company that all
employees of the Company with access to technical information execute and
deliver proprietary invention agreements with the Company, and are
obligated under the terms thereof to assign all inventions made by them
during the course of employment to the Company.
(ii) All Proprietary Software set forth in
Section 3.16(b) of the Disclosure Letter, was either developed (A)
by employees of the Company within the scope of their employment;
or (B) by independent contractors or other third parties who have
assigned all of their rights to the Company pursuant to written
agreement.
(i) Except as set forth in Section 3.16(i) of
the Disclosure Letter, the consummation of the transactions contemplated
hereby will not result in the loss or impairment of the Company's rights to
own, use, or to bring any action for the infringement of, any of the
Intellectual Property, nor will such consummation require the consent of
any third party in respect of any Intellectual Property.
(j) The Company has not used or authorized the
use of the Customer Information, whether obtained through the Company
Website or otherwise, in an unlawful manner, or in a manner violative of
the Company Privacy Policy or the privacy rights of its customers; the
Company has not collected any Customer Information through the Company
Website in an unlawful manner or in violation of the Company Privacy
Policy, and the transactions contemplated by this Agreement will not
violate the Company Privacy Policy or the privacy rights of its customers.
The Company has reasonable security measures in place to protect the
Customer Information it receives through the Company Website and which it
stores in its computer systems from illegal use by third parties or use by
third parties in a manner violative of the rights of privacy of its
customers. The Company represents to its customers on the Company Website
that it assures reasonable security as to the protection of Customer
Information.
3.17 Trade Relations. Except as set forth in Section 3.17
of the Disclosure Letter or in the SEC Reports filed prior to the date
hereof, there exists no actual or, to the knowledge of the Company,
threatened termination, cancellation or limitation of, or any adverse
modification or change in, the business relationship of the Company or any
of its Subsidiaries, or the business of the Company or any of its
Subsidiaries, with any customer or supplier or any group of customers or
suppliers whose purchases or inventories provided to the Company's business
are individually or in the aggregate material to the Condition of the
Company, and there exists no present condition or state of fact or
circumstance that would adversely affect the Condition of the Company or
prevent the Company or any of its Subsidiaries from conducting such
business relationships or such business with any such customer, supplier or
group of customers or suppliers in the same manner as heretofore conducted
by the Company or each Subsidiary.
3.18 Insurance. The insurance policies held by or on
behalf of the Company are valid and enforceable in accordance with their
terms and are in full force and effect and cover the risks associated with
the Company's business that are customarily insured against in the industry
in such amounts as are customary in the industry. None of such policies
will be affected by, or terminate or lapse by reason of, any transaction
contemplated by this Agreement.
3.19 Environmental Matters. The Company and each of its
Subsidiaries is in compliance with all applicable Environmental Laws,
except to the extent that a failure to be in compliance would not have a
material adverse effect on the Condition of the Company. There is no civil,
criminal or administrative judgment, action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter
pending or, to the knowledge of the Company, threatened against the Company
or any of its Subsidiaries pursuant to Environmental Laws; and, to the
knowledge of the Company, there are no past or present events, conditions,
circumstances, activities, practices, incidents, agreements, actions or
plans that would reasonably be expected to prevent material compliance
with, or which have given rise to or will give rise to material liability
under, Environmental Laws.
3.20 Potential Conflicts of Interest. No officer or
director of the Company, no spouse of any such officer or director, and, to
the knowledge of the Company, no relative of such spouse or of any such
officer or director and no Affiliate of any of the foregoing (a) owns,
directly or indirectly, any interest in (excepting less than one percent
(1%) stock holdings for investment purposes in securities of publicly held
and traded companies), or is an officer, director, employee or consultant
of, any Person that is, or is engaged in business as, a competitor, lessor,
lessee, supplier, distributor, sales agent or customer of, or lender to or
borrower from, the Company, (b) owns, directly or indirectly, in whole or
in part, any tangible or intangible property that the Company has used, or
that the Company will use, in the conduct of business, or (c) to the
Company's knowledge, has any cause of action or other claim whatsoever
against, or owes or has advanced any amount to, the Company, except for
claims in the ordinary course of business such as for accrued vacation pay,
accrued benefits under employee benefit plans, and similar matters and
agreements existing on the date hereof.
3.21 Anti-takeover. The Company and its Board of
Directors has taken all actions required to be taken (x) in order to
approve the execution of the Agreement and the consummation of the
transactions contemplated thereby for purposes of Section 203 of Delaware
General Corporation Law, and (y) so that the restrictions on "business
combinations" contained in Section 203 of Delaware General Corporation Law
do not apply to the Purchasers or their respective Affiliates. As of the
date hereof and as of the Closing Date, the Company shall not have adopted
a stockholder rights plan or any other similar anti-takeover plan.
3.22 Broker's, Finder's or Similar Fees. Except for the
fee payable to Xxxxxx Xxxxxxx & Co. Incorporated and Dresdner Kleinwort
Xxxxxxxxxxx, the amount of which has been previously disclosed to the
Purchasers and which in the aggregate does not exceed $4,000,000, there are
no brokerage commissions, finder's fees or similar fees or commissions
payable by the Company in connection with the transactions contemplated
hereby.
3.23 Private Offering. No form of general solicitation or
general advertising was used by the Company or its representatives in
connection with the offer or sale of the Purchased Shares. No registration
of the Purchased Shares, pursuant to the provisions of the Securities Act
or any state securities or "blue sky" laws, will be required by the offer,
sale or issuance of the Purchased Shares. The Company agrees that neither
it, nor anyone acting on its behalf, shall offer to sell the Purchased
Shares or any other securities of the Company so as to require the
registration of the Purchased Shares pursuant to the provisions of the
Securities Act or any state securities or "blue sky" laws, unless such
Purchased Shares or other securities are so registered.
3.24 Full Disclosure. The Company has not failed to
disclose to the Purchasers any facts material to the Condition of the
Company. No representation or warranty by the Company contained in this
Agreement (including the Disclosure Letter) or in any certificate or other
writing delivered pursuant hereto or in connection herewith, contains or
will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers individually, and not jointly or
severally, hereby represents and warrants to the Company as follows:
4.1 Corporate Existence and Power. Such Purchaser (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (b) has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement and each
of the other Transaction Documents to which it is a party, and (c) has the
financial resources to perform its obligations hereunder.
4.2 Authorization; No Contravention. The execution,
delivery and performance by such Purchaser of this Agreement and each of
the other Transaction Documents to which it is a party and the transactions
contemplated hereby and thereby, (i) have been duly authorized by all
necessary corporate, partnership or limited liability company, as the case
may be, action, (ii) do not contravene the terms of the such Purchaser's
organizational documents, (iii) do not violate, conflict with or result in
any breach or contravention of, or the creation of any Lien under, any
Contractual Obligation of such Purchaser or any Requirement of Law
applicable to such Purchaser, and (iv) do not violate any Orders of any
Governmental Authority against, or binding upon, such Purchaser, except in
the cases of clauses (iii) and (iv) for such violations, conflicts,
breaches or defaults which would not materially delay consummation of the
transactions contemplated by this Agreement.
4.3 Governmental Authorization; Third Party Consents. No
material approval, consent, compliance, exemption, authorization or other
action by, or notice to, or filing with, any Governmental Authority or any
other Person, and no lapse of a waiting period under any Requirement of
Law, is necessary or required in connection with the execution, delivery or
performance (including the purchase of such Purchaser's Purchased Shares)
by, or enforcement against, such Purchaser of this Agreement and each of
the other Transaction Documents to which it is a party or the transactions
contemplated hereby and thereby.
4.4 Binding Effect. This Agreement has been, and as of
the Closing Date each of the other Transaction Documents to which such
Purchaser is a party will have been, duly executed and delivered by such
Purchaser, and this Agreement constitutes, and as of the Closing Date each
of the other Transaction Documents will constitute, the legal, valid and
binding obligations of such Purchaser, enforceable against such Purchaser
in accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or
in equity).
4.5 Purchase for Own Account. The Purchased Shares to be
acquired by such Purchaser pursuant to this Agreement are being or will be
acquired for its own account and with no intention of distributing or
reselling such Purchased Shares or any part thereof in any transaction that
would be in violation of the securities laws of the United States of
America, or any state. If such Purchaser should in the future decide to
dispose of any of such Purchased Shares, such Purchaser understands and
agrees that it may do so only in compliance with the Securities Act and
applicable state securities laws, as then in effect.
4.6 Legends. Such Purchaser agrees to the imprinting, so
long as required by law, of a legend on certificates representing such
Purchaser's Purchased Shares and shares of Common Stock issuable upon
conversion of such Purchaser's Purchased Shares to the following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO
REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
STOCKHOLDERS AGREEMENT, DATED AS OF JULY, 10, 2001, A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. NO TRANSFER OF
SUCH SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS
ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE
RESTRICTIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT.
4.7 Reliance Upon Purchaser Representations. Such
Purchaser understands that at Closing such Purchaser's Purchased Shares
will not be registered under the Securities Act on the ground that the sale
provided for in this Agreement and the issuance of securities hereunder is
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof, and that the Company's reliance on such exemption is based in part
on such Purchaser's representations set forth herein.
4.8 Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable
by such Purchaser in connection with the transactions contemplated hereby,
except for the fee payable by the Primary Purchaser to Xxxxx & Co., the
Primary Purchaser's financial advisor.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees with each of the
Purchasers as follows:
5.1 Ordinary Course of Business. (a) Except as otherwise
expressly contemplated by the terms of this Agreement or as set forth in
Section 5.1 of the Disclosure Letter, during the period from the date of
this Agreement to the Closing (the "Pre-Closing Period"), the Company shall
(unless otherwise consented to in writing by the Primary Purchaser) (i)
conduct its business in the ordinary course consistent with past practice,
(ii) use reasonable best efforts to preserve intact its and its
Subsidiaries' current business organizations, keep available the services
of their current officers, licensors, licensees, advertisers, distributors,
governmental authorities and others having business dealings with them to
the end that their goodwill and ongoing businesses shall be unimpaired, and
(iii) not take any action that could cause any representation or warranty
contained in Article III to be untrue in any material respect or cause a
covenant to fail to be satisfied in any material respect.
(b) Without limiting the generality of the
foregoing, during the Pre-Closing Period, other than as expressly provided
in this Agreement or as set forth in Section 5.1 of the Disclosure Letter,
each of the Company and its Subsidiaries shall not, without the prior
written consent of the Primary Purchaser:
(i) (A) declare, set aside or pay any dividends
on, or make any other distributions in respect of capital stock of
the Company or any of its Subsidiaries, (B) split, combine or
reclassify capital stock of the Company or any of its Subsidiaries
or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital
stock of the Company or any of its Subsidiaries, (C) purchase,
redeem or otherwise acquire any shares of capital stock or any
other securities of the Company or any of its Subsidiaries, (D)
pay or set aside a "sinking fund" for the payment of any principal
amount of outstanding debt securities of the Company or any of its
Subsidiaries, or (E) consummate or enter into an agreement to
recapitalize the Company or any of its Subsidiaries;
(ii) issue, deliver, sell, transfer, pledge or
otherwise encumber or subject to any Lien any shares of capital
stock of the Company or any of its Subsidiaries, any other voting
securities or any securities convertible into, or any rights,
warrants, options or calls to acquire, any capital stock of the
Company or any of its Subsidiaries;
(iii) amend the Certificate of Incorporation,
the Bylaws or any similar governing documents of any Subsidiary of
the Company;
(iv) merge, consolidate or reorganize the
Company or any of its Subsidiaries with any other Person;
(v) form, join, participate or agree to form,
join or participate in the business, operations, sales,
distribution, or development of any other Person or contribute
assets, employees, cash or customers or other resources to any
such arrangement, other than in the ordinary course of business
consistent with past practices;
(vi) acquire or agree to acquire by merging or
consolidating with, or by purchasing assets of, or by any other
manner, any business or any Person, other than purchases supplies
in the ordinary course of business consistent with past practice;
(vii) sell, lease, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of
any of significant amount of its properties or assets, otherwise
than in the ordinary course of business;
(viii) (A) incur any significant amount of
Indebtedness or (B) make any loans, advances or capital
contributions to, or investments in, any other Person, otherwise
than in the ordinary course of business;
(ix) make, commit or otherwise agree to make any
capital expenditure, or enter into any agreement or agreements
providing for capital expenditures which, individually, are in
excess of $100,000 or, in the aggregate, are in excess of
$300,000;
(x) pay, discharge, settle or satisfy any
material claims, liabilities, obligations or litigation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge, settlement or satisfaction, in the
ordinary course of business consistent with past practices;
(xi) transfer or license to any person or entity
or otherwise extend, amend or modify any rights to the
Intellectual Property of the Company or its Subsidiaries other
than in the ordinary course of business;
(xii) modify, amend, alter or change terms,
provisions or rights and obligations of any agreement which is
material to the Company and its Subsidiaries taken as a whole;
(xiii) take any action or omit to take any
action which, individually or in the aggregate, would have a
material adverse effect on the Condition of the Company;
(xiv) take any action or omit to take any action
which would reasonably be expected to materially delay or
materially adversely affect the ability of any of the parties to
obtain any consent, waiver or other approval of any Governmental
Authority or other Person required to consummate the transactions
contemplated hereby;
(xv) amend or modify any Plan or adopt any
compensation or benefit agreement, plan or arrangement for the
benefit of any employee, director, consultant or stockholder of
the Company and its Subsidiaries or increase the compensation
payable to any such individual;
(xvi) adopt a shareholder rights plan or similar
plan or agreement;
(xvii) (A) effect a voluntary liquidation,
dissolution or winding up of the Company or any of its
Subsidiaries, or (B) voluntarily file for bankruptcy, or otherwise
seek protection under any federal or state bankruptcy or similar
law; or
(xviii) authorize, or commit or agree to take,
any of the foregoing actions.
5.2 Delivery of SEC Reports and Press Releases; Listing;
Nasdaq.
(a) During the Pre-Closing Period, the Company shall
deliver to the Purchasers, promptly upon their becoming available, copies
of (i) all SEC Reports of the Company, (ii) all financial statements,
reports, notices and proxy statements sent or made available by the Company
to its security holders, (iii) all regular and periodic reports and all
registration statements and prospectuses filed by the Company with any
securities exchange or with the Commission, and (iv) all press releases and
other statements made available by the Company to the public concerning
material developments in the business of the Company or any of its
Subsidiaries.
(b) Prior to the Closing, the Company shall secure the
listing of all shares of Common Stock that may be issued upon conversion of
the Series A Preferred Stock upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are
then listed and, shall use its reasonable best efforts to maintain such
listing for so long as the Purchasers or any of their respective Affiliates
own any shares of Common Stock or Series A Preferred Stock.
(c) The Company has previously delivered to Nasdaq the
notice of issuance of the Series A Preferred Stock in accordance with the
Nasdaq Marketplace Rule 4310(c)(17) ("Rule 4310(c)(17)"). The Company has
applied to Nasdaq for the exception under Nasdaq Marketplace Rule
4350(i)(2) ("Rule 4350(i)(2)") to the requirement to obtain shareholder
approval for the transactions contemplated by this Agreement and the other
Transaction Documents. The Company agrees to mail the letter to its
shareholders contemplated by Rule 4350(i)(2) immediately upon receipt from
Nasdaq that the exception contemplated by such rule has been granted.
5.3 Reservation of Common Stock. The Company shall at all
times reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issue or delivery upon conversion of the
Series A Preferred Stock, as provided in the Series A Certificate of
Designations, the maximum number of shares of Common Stock that may be
issuable or deliverable upon such conversion. Such shares of Common Stock
shall be duly authorized and, when issued or delivered in accordance with
the Series A Certificate of Designations, shall be validly issued, fully
paid and non-assessable. The Company shall issue such shares of Common
Stock in accordance with the terms of the Series A Certificate of
Designations and otherwise comply with the terms hereof and thereof.
5.4 Books and Records. The Company shall keep proper
books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the
Company in accordance with GAAP consistently applied.
5.5 Inspection. During the Pre-Closing Period, the
Company shall permit representatives of the Primary Purchaser to visit and
inspect any of its properties, to examine its corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with their respective directors,
officers and independent public accountants, all at such reasonable times
during normal business hours and as often as may be reasonably requested
upon reasonable advance notice to the Company; provided, however, that no
such inspection, examination or inquiry, the failure to conduct same, nor
any knowledge of the Primary Purchaser, including any knowledge obtained by
the Primary Purchaser in connection with any such inspection, investigation
or inquiry, shall constitute a waiver of any rights the Primary Purchaser
may have under any representation, warranty, covenant, term or agreement
under any of the Transaction Documents.
5.6 Board of Directors. The Company shall cause the Board
of Directors, effective as of the Closing, to be comprised as set forth in
the Stockholders Agreement.
5.7 No Solicitation. Except as set forth in Section 5.7
of the Disclosure Letter, during the Pre-Closing Period, neither the
Company nor any of its Affiliates or representatives shall (a) solicit any
inquiries or proposals or enter into or continue any discussions,
negotiations or agreements with any Person other than the Primary Purchaser
relating to (i) the issuance, sale or exchange (whether by merger or
otherwise) of the Company's or any of its Subsidiaries' capital stock or
Indebtedness, (ii) the sale of any significant amount of property and other
assets of the Company or its Subsidiaries, or (b) provide any assistance or
information to or otherwise cooperate with any Person in connection with
any such inquiry, proposal, or transaction.
5.8 Filing of Series A Certificate of Designations. Prior
to the Closing, the Company shall cause the Series A Certificate of
Designations to be duly filed by the Company with the Secretary of State of
the State of Delaware in accordance with the Delaware General Corporation
Law, and shall deliver to the Primary Purchaser evidence of such filings in
form and substance reasonably satisfactory to the Primary Purchaser.
5.9 Use of Proceeds. The proceeds of the sale of Series A
Preferred Stock contemplated hereby shall be used by the Company for
general corporate purposes.
5.10 Consent and Standstill Agreement. The Company agrees
to promptly take all action necessary to enforce its rights under the
Consent and Standstill Agreements for any breaches of such agreements by a
Stockholder (as defined in the Consent and Standstill Agreements).
5.11 Restructuring. In the event that the transactions
contemplated by this Agreement and the other Transaction Documents shall
have been modified as contemplated in Section 7.2(r), then the Company
shall use its reasonable best efforts to raise, and cooperate with the
Primary Purchaser in raising, additional equity financing for the Company
in an amount equal to the amount which would have been raised had the
Company issued the Xxxxx Purchased Shares or the Xxxx Purchased Shares, as
the case may be, at Closing. As a condition to such financing, the Primary
Purchaser shall own the same percentage of voting securities of the Company
immediately following such financing as it owned immediately prior to such
financing.
ARTICLE VI
AFFIRMATIVE COVENANTS OF
THE PURCHASERS AND THE COMPANY
6.1 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each of the parties will use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under this Agreement
and applicable laws and regulations to consummate the transactions
contemplated by this Agreement as soon as practicable after the date
hereof, including (i) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings, and other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals, permits, and
authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Authority in order to consummate the transactions
contemplated by this Agreement and (ii) taking all reasonable steps as may
be necessary to obtain all such consents, waivers, licenses, registrations,
permits, authorizations, orders and approvals. The parties agree that any
costs and expenses of obtaining such consents, waivers, licenses,
registrations, permits, authorizations, orders and approvals shall be borne
by the Company, including any costs and expenses related obtaining a
consent, waiver or other approval of the parties to the Company's Third
Amended and Restated Investor Rights Agreement, dated April 28, 2000, as
may be amended (the "Existing Investors' Rights Agreement"). Nothing in
this Agreement (including this Section 6.1) shall require Purchasers to
amend any of Transaction Documents or enter into any additional agreements
in order to obtain any consents, waivers, licenses, registrations, permits,
authorizations, orders and approvals contemplated above.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to the Obligation of the Primary Purchaser
and the Company. The obligations of the Primary Purchaser and the Company
to consummate the Closing are subject to the satisfaction (or waiver by the
Primary Purchaser and the Company) of each of the following conditions:
(a) There shall not be (i) in force any statute,
rule, regulation, order or decree restraining, enjoining or prohibiting the
consummation of the transactions contemplated by this Agreement and the
other Transaction Documents or (ii) any material suit or proceeding by a
Governmental Authority to restrain or enjoin the transactions contemplated
by this Agreement and the other Transaction Documents.
(b) All consents, approvals, exemptions,
authorizations, waivers or other actions by, or notice to, or filings with,
any Governmental Authorities in respect of any Requirement of Law necessary
to consummate the transactions contemplated hereby, shall have been
obtained, provided, however, that the provisions of this Section 7.1(b)
shall not be available to any party whose failure to fulfill its
obligations pursuant to Section 6.1 shall have been the cause of, or shall
have resulted in, the failure to obtain such consents, approvals,
exemptions, authorizations, waivers or other actions.
(c) (i) The Company shall have received (and
delivered to the Purchasers) written confirmation from Nasdaq that the
transactions contemplated by this Agreement and the other Transaction
Documents shall not require shareholder approval pursuant to Rule
4350(i)(2) and the Company shall have complied with the conditions of such
rule, (ii) the Company shall have delivered to the Nasdaq, in accordance
with Rule 4310(c)(17), a notice of the proposed issuance of the Preferred
Stock pursuant to this Agreement, at least fifteen calendar days prior to
the Closing Date or received from Nasdaq, prior to the Closing Date, a
waiver of the requirement to give such notice, and (iii) the shares of
Common Stock reserved for issuance upon conversion of the Series A
Preferred Stock shall have been authorized for listing on the Nasdaq Stock
Market.
7.2 Conditions to Obligation of the Primary Purchaser.
The obligation of the Primary Purchaser to consummate the Closing is
subject to the satisfaction (or waiver by the Primary Purchaser) of each of
the following additional conditions:
(a) Each of the representations and warranties
of the Company set forth in this Agreement that is qualified as to
materiality or material adverse effect shall be true and correct, and each
of the representations and warranties of the Company set forth in this
Agreement that is not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to
the extent in either case that such representations and warranties speak as
of another date).
(b) The Company shall have performed or complied
in all material respects with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) All material consents, waivers and approvals
of any Person (other than a Governmental Authority) that are necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Company of this Agreement and each of the other
Transaction Documents shall have been obtained and shall be in full force
and effect (including, without limitation, the consent, approval and waiver
of a majority of the holders of "Registrable Securities" (as defined in the
Existing Investors' Rights Agreement) under the Existing Investors' Rights
Agreement), and the Primary Purchaser shall have been furnished with
appropriate evidence thereof.
(d) Since the date hereof, there shall not have
been any material adverse change in the Condition of the Company.
(e) The Series A Certificate of Designations
shall have been duly and properly filed with the Secretary of State of
Delaware in accordance with the Delaware General Corporation Law.
(f) A majority of the holders of "Registrable
Securities" (as defined in the Existing Investors' Rights Agreement) under
the Existing Investors' Rights Agreement shall have waived their rights
pursuant to Section 1.12 of the Existing Investors' Rights Agreement and
consented to the Registration Rights Agreement, including, the grant of
"demand" and "piggyback" registration rights pursuant to the Registration
Rights Agreement.
(g) The Company and the Persons listed in
Section 7.2(g) of the Disclosure Letter shall have entered into the Consent
and Standstill Agreement and delivered copies thereto to the Primary
Purchaser.
(h) The employees of the Company listed in
Section 7.2(h) of the Disclosure Letter shall have entered into a
Confidentiality, Invention Assignment and Noncompetition Agreement,
substantially in the form attached hereto as Exhibit F.
(i) The employees of the Company listed in
Section 7.2(i) of the Disclosure Letter shall have entered into a
Confidentiality, Invention Assignment and Nonsolicitation Agreement,
substantially in the form attached hereto as Exhibit G.
(j) The Company shall have delivered to the
Primary Purchaser the Service Agreements duly executed by the Company.
(k) The Company shall have delivered to the
Primary Purchaser the Stockholders Agreement duly executed by the Company
and the Additional Purchasers shall have delivered to the Primary Purchaser
the Stockholders Agreement duly executed by the Additional Purchasers.
(l) The Company shall have delivered to the
Primary Purchaser the Registration Rights Agreement duly executed by the
Company.
(m) The Company shall have delivered to the
Primary Purchaser the Retention Incentive Agreement in substantially the
form set forth in Exhibit H, duly executed by the Company and the Chief
Executive Officer of the Company.
(n) The Company shall have established the
Retention Plan in substantially the form set forth in Exhibit I.
(o) The Board of Directors of the Company shall
be comprised as set forth in the Stockholders Agreement.
(p) The Company shall have delivered to the
Primary Purchaser an opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, counsel
for the Company, dated the Closing Date, substantially in the form attached
hereto as Exhibit J.
(q) The Company shall have delivered to the
Primary Purchaser an opinion of the Company's General Counsel, dated the
Closing Date, substantially in the form attached hereto as Exhibit K.
(r) The conditions to the obligations of the
Company under Section 7.4 and Section 7.5 with respect to the Xxxxx
Purchased Shares and the Xxxx Purchased Shares shall have been satisfied
(or waived) or if not so satisfied or waived, the transactions contemplated
by this Agreement and the other Transaction Documents shall have been
modified to the reasonable satisfaction of the Primary Purchaser such that
upon issuance of the Primary Purchaser Purchased Shares, the Primary
Purchaser will own the same percentage of the Company's voting securities
as if such Xxxxx Purchased Shares and the Xxxx Purchased Shares, as the
case may be, had been issued at Closing.
(s) The Company shall have delivered to the
Primary Purchaser a certificate, dated the Closing Date, signed by the
Chief Executive Officer of the Company, certifying as to the fulfillment of
the conditions set forth in clauses (a), (b), (c), and (d) of this Section
7.2.
7.3 Conditions to the Obligation of the Company With
Respect To the Primary Purchaser Purchased Shares. The obligation of the
Company to consummate the Closing with respect to the Primary Purchaser
Purchased Shares is subject to the satisfaction (or waiver by the Company)
of the following further conditions:
(a) Each of the representations and warranties
of the Primary Purchaser set forth in this Agreement that is qualified as
to materiality or material adverse effect shall be true and correct, and
each of the representations and warranties of the Primary Purchaser set
forth in this Agreement that is not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date (except
to the extent in either case that such representations and warranties speak
as of another date).
(b) The Primary Purchaser shall have performed
or complied in all material respects with all agreements and covenants
required to be performed by it under this Agreement at or prior to the
Closing Date.
(c) The Primary Purchaser shall have delivered
to the Company the Service Agreements duly executed by the Primary
Purchaser.
(d) The Primary Purchaser shall have delivered
to the Company the Stockholders Agreement duly executed by the Primary
Purchaser.
(e) The Primary Purchaser shall have delivered
to the Company the Registration Rights Agreement duly executed by the
Primary Purchaser.
(f) The Primary Purchaser shall have delivered
to the Company an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
special counsel for the Primary Purchaser, dated the Closing Date,
substantially in the form attached hereto as Exhibit L.
(g) The Primary Purchaser shall have delivered
to the Company a certificate, dated the Closing Date, signed by an
executive officer of the Primary Purchaser, certifying as to the
fulfillment of the conditions set forth in clauses (a) and (b) of this
Section 7.3.
7.4 Conditions to the Obligation of the Company with
Respect to the Xxxxx Purchased Shares. The obligations of the Company to
consummate the Closing with, and only with, respect to the Xxxxx Purchased
Shares is subject to the satisfaction (or waiver by the Company) of the
following further conditions:
(a) Each of the representations and warranties
of Xxxxx set forth in this Agreement shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to
the extent in either case that such representations and warranties speak as
of another date).
(b) Xxxxx shall have performed or complied in
all material respects with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) Xxxxx shall have delivered to the Company
the Stockholders Agreement duly executed by Xxxxx.
(d) Xxxxx shall have delivered to the Company a
certificate, dated the Closing Date, signed by an executive officer of
Xxxxx, certifying as to the fulfillment of the conditions set forth in
clauses (a) and (b) of this Section 7.4.
7.5 Conditions to the Obligation of the Company with
Respect to the Xxxx Purchased Shares. The obligations of the Company to
consummate the Closing with, and only with, respect to the Xxxx Purchased
Shares is subject to the satisfaction (or waiver by the Company) of the
following further conditions:
(a) Each of the representations and warranties
of Xxxx set forth in this Agreement shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to
the extent in either case that such representations and warranties speak as
of another date).
(b) Xxxx shall have performed or complied in all
material respects with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) Xxxx shall have delivered to the Company the
Stockholders Agreement duly executed by Xxxx.
(d) Xxxx shall have delivered to the Company a
certificate, dated the Closing Date, signed by an executive officer of
Xxxx, certifying as to the fulfillment of the conditions set forth in
clauses (a) and (b) of this Section 7.5.
7.6 Conditions to the Obligation of the Additional
Purchasers. The obligation of each Additional Purchaser to consummate the
Closing is subject to the satisfaction (or waiver by such Additional
Purchaser) of the following condition:
(a) The conditions to the obligations of the
Primary Purchaser set forth in this Article VII shall have been satisfied
(or waived by the Primary Purchaser).
ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. This Agreement may be
terminated prior to the Closing as follows:
(i) by mutual written consent of the Primary
Purchaser and the Company;
(ii) by either the Primary Purchaser or the
Company upon written notice to the other party if the Closing
shall not have been consummated on or before July 13, 2001 (the
"Outside Date"), unless the failure to consummate the Closing by
such date shall be due to the action or failure to act of the
party seeking to terminate this Agreement;
(iii) by either the Primary Purchaser or the
Company upon written notice to the other party if any Governmental
Authority shall have issued an order, decree or injunction or
taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree or injunction or other action
shall have become final and nonappealable; or
(iv) by either the Primary Purchaser or the
Company upon written notice to the other party, if there shall
have been a breach by the other of any of its representations,
warranties, covenants or obligations contained in this Agreement,
which breach would result in the failure to satisfy the conditions
set forth in Section 7.2(a) or Section 7.2(b) (in the case of a
breach by the Company) or Section 7.3(a) or Section 7.3(b) (in the
case of a breach by the Primary Purchaser), and in any such case
such breach shall be incapable of being cured or, if capable of
being cured, shall not have been cured by the Outside Date after
written notice thereof shall have been received by the party
alleged to be in breach.
8.2 Effect of Termination. In the event of termination by
the Company or the Primary Purchaser pursuant to Section 8.1, written
notice thereof shall promptly be given to the other party and, except as
otherwise provided herein, the transactions contemplated by this Agreement
shall be terminated without further action by either party. Notwithstanding
the foregoing, nothing in this Section 8.2 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of the Company, on the
one hand, and the Purchasers, on the other hand, to compel specific
performance of the other party of its obligations under this Agreement.
After termination pursuant to Section 8.1, no party shall have any
liability to the other, except for any willful breach of any
representation, warranty, covenant or obligation contained in this
Agreement. This Section 8.2 and Section 10.9 (Expenses) shall survive any
termination of this Agreement.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival. Each of the representations and warranties
of the Company contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive
the Closing until March 31, 2003 except for (i) those contained in Sections
3.1, 3.2, 3.4, 3.5, , which shall survive indefinitely and (ii) the
representations and warranties contained in Sections 3.12, 3.13 and 3.15,
which shall survive until expiration of the statute of limitations
applicable to the matters covered thereby (giving effect to any waiver or
extension thereof). In the event notice of any claim for indemnification
under this Agreement shall have been given within the applicable survival
period, the representations and warranties that are the subject of such
indemnification claim shall survive until such time as such claim is
finally resolved. The covenants and agreements of the Company set forth in
this Agreement, including, without limitation, the indemnification
obligations of the Company hereunder shall survive indefinitely except as
expressly provided herein.
9.2 Indemnification. (a) The Company agrees to indemnify,
defend and hold harmless each of the Purchasers and their respective
Affiliates and their respective officers, directors, agents, employees,
subsidiaries, partners, members, attorneys, accountants, and controlling
persons (each, an "Indemnified Party") to the fullest extent permitted by
law from and against any and all losses, Claims, damages, costs, expenses
(including reasonable fees, disbursements and other charges of counsel) or
other liabilities (collectively, "Losses") resulting from, arising out of
or relating to (i) any breach of any representation or warranty by the
Company or its Affiliates in this Agreement or the other Transaction
Documents, and (ii) any breach of any covenant or agreement of the Company
in this Agreement or the other Transaction Documents. The amount of any
payment to any Indemnified Party herewith in respect of any Loss shall be
of sufficient amount to make such Indemnified Party whole for any
diminution in value of the securities purchased hereunder below the
purchase price paid by such Indemnified Party hereof.
(b) The indemnification obligations of the Company
pursuant to Section 9.2(a)(i) shall not be effective until the aggregate
dollar amount of all Losses that would otherwise be indemnifiable pursuant
to Section 9.2(a)(i) exceeds $400,000 (the "Threshold"), at which point
such obligations shall be effective for all Losses in excess of 50% of the
Threshold, provided that the foregoing limitation shall not apply with
respect to any breach of the representations and warranties set forth in
Sections 3.1, 3.2, 3.4, 3.5 and 3.12.
(c) Notwithstanding anything in this Agreement to the
contrary, it is hereby understood that for purposes of this Article IX, all
materiality and material adverse effect exceptions and qualifications set
forth in any representation or warranty contained in this Agreement or the
other Transaction Documents shall be disregarded.
(d) If and to the extent that the indemnification
provided for in this Article IX is unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction
of such Losses which shall be permissible under applicable law.
9.3 Notification and Procedure. Each Indemnified Party
under this Article IX shall, promptly after the receipt of notice of the
commencement of any claim against such Indemnified Party in respect of
which indemnity may be sought from the Company under this Article IX,
notify the Company in writing of the commencement thereof. The omission of
any Indemnified Party to so notify the Company of any such action shall not
relieve the Company from any liability which it may have to such
Indemnified Party other than to the extent, and only to the extent, that
such omission materially prejudices the Company by resulting in the
Company's forfeiture of substantive rights or defenses. In case any such
claim shall be brought against any Indemnified Party, and it shall notify
the Company of the commencement thereof, the Company shall be entitled to
assume the defense thereof at its own expense, with counsel satisfactory to
such Indemnified Party in its reasonable judgment; provided, however, that
any Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any claim in
which both the Company, on the one hand, and an Indemnified Party, on the
other hand, are, or are reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel and to
control its own defense of such claim if, in the reasonable opinion of
counsel to such Indemnified Party, either (x) one or more defenses are
available to the Indemnified Party that are not available to the Company or
(y) a conflict or potential conflict exists between the Company, on the one
hand, and such Indemnified Party, on the other hand, that would make such
separate representation advisable; provided, however, that the Company (i)
shall not be liable for the fees and expenses of more than one counsel to
all Indemnified Parties in any one legal action or group of related legal
actions, and (ii) shall reimburse the Indemnified Parties for all of such
fees and expenses of such counsel incurred in any action between the
Company and the Indemnified Parties or between the Indemnified Parties and
any third party, as such expenses are incurred. The Company agrees that it
will not, without the prior written consent of the Indemnified Party,
settle, compromise or consent to the entry of any judgment in any pending
or threatened claim relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be
made a party thereto) unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all
liability arising or that may arise out of such claim.
9.4 Exclusive Remedy. The rights accorded to an
Indemnified Party hereunder shall be the sole and exclusive remedy for
breach of any representation, warranty or covenant of the Company contained
in this Agreement except for claims based on fraud or willful misconduct by
the Company; provided, however, that notwithstanding the foregoing or
anything to the contrary contained in this Agreement, nothing in this
Article IX shall restrict or limit any rights that any Indemnified Party
may have to seek equitable relief.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing
and shall be by registered or certified first-class mail, return receipt
requested, telecopier, courier service or personal delivery:
If to the Company:
iBeam Broadcasting Corporation
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
If to the Primary Purchaser:
Xxxxxxxx Communications, LLC
Xxx Xxxxxxxx Xxxxxx 00-0
Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to Xxxxx:
Xxxxx & Company Incorporated
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx
If to Xxxx:
Xxxx iBeam, LLC
Xxx Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telcopy: (000) 000-0000
Attention: Xxxxxx Xxxx
All such notices, demands and other communications shall
be deemed to have been duly given when delivered by hand, if personally
delivered; when delivered by courier, if delivered by commercial courier
service; five (5) Business Days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is mechanically acknowledged, if
telecopied.
10.2 Successors and Assigns; No Third Party Beneficiaries.
(a) This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties
hereto. Subject to applicable securities laws and the terms and conditions
thereof, the Purchasers, upon prior written notice to the Company, may
assign any of their rights under this Agreement or the other Transaction
Documents to any of their respective Affiliates. The Company may not assign
any of its rights under this Agreement without the written consent of the
Primary Purchaser. No Person other than the parties hereto and their
successors and permitted assigns is intended to be a beneficiary of this
Agreement.
(b) Notwithstanding Section 10.2 of this
Agreement, during the Pre-Closing period, Xxxxx shall be entitled to assign
its right to purchase all or any part of the Xxxxx Purchased Shares to any
Person, provided that (i) such assignment shall (A) be made in compliance
with applicable law (including the federal and state securities laws), and
(B) not cause the exemption from registration of the Purchased Shares to be
issued pursuant to this Agreement to be not available, (ii) such assignee
agrees in writing to be bound by the terms of this Agreement as an
Additional Purchaser, (iii) such assignee has the financial resources to
perform its obligations hereunder, and (iv) such assignee agrees to be
bound by the terms of the Stockholders Agreement to the same extent Xxxxx
would have been bound by such agreement, including Section 2.4 thereof.
10.3 Amendment and Waiver.
(a) No failure or delay on the part of the
Company or any of the Purchasers in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the Company or any of
the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of
or to any provision of this Agreement, any waiver of any provision of this
Agreement shall be effective (i) only if it is made or given in writing and
signed by the Company and the Primary Purchaser and (ii) only in the
specific instance and for the specific purpose for which made or given,
provided that any amendment, supplement, modification, or waiver that would
materially and adversely affect the rights of an Additional Purchaser
hereunder shall require the prior written consent of such Additional
Purchaser. Except where notice is specifically required by this Agreement,
no notice to or demand on the Company in any case shall entitle the Company
to any other or further notice or demand in similar or other circumstances.
10.4 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
10.5 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
10.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of law thereof.
10.7 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable
shall substantially impair the benefits of the remaining provisions hereof.
10.8 Entire Agreement. This Agreement, together with the
exhibits and Disclosure Letter hereto, and the other Transaction Documents
are intended by the parties hereto as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises,
representations, warranties or undertakings, other than those set forth or
referred to herein or therein. This Agreement, together with the exhibits
and Disclosure Letter hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to
such subject matter.
10.9 Expenses. Except as otherwise contemplated in the
Transaction Documents, including Section 6.1 hereof and the last sentence
of this Section 10.9, each party shall pay its own expenses incurred in
connection with the Transaction Documents and the transactions contemplated
thereby. Notwithstanding the foregoing, the Company agrees to promptly
reimburse the Primary Purchaser an amount equal to (i) the reasonable fees,
disbursements and other charges of Primary Purchaser's legal counsel in
connection with the preparation, negotiation, execution, delivery and
performance of this Agreement and the other Transaction Documents, less
(ii) the amount by which the fees, disbursements and other charges paid by
the Company to Xxxxxx Xxxxxxx & Co. Incorporated and Dresdner Kleinwort
Xxxxxxxxxxx, in the aggregate, are less than $4,000,000.
10.10 Publicity; Confidentiality. (a) All press releases
or other public communications of any nature relating to this Agreement,
the other Transactions Documents and the transactions contemplated hereby
or thereby, and the method of the release for publication thereof, shall be
subject to the prior mutual approval of the Primary Purchaser and the
Company which approval shall not be unreasonably withheld by such parties;
provided however, that nothing herein shall prevent any party from
publishing such press release or other public communications as may be
required by applicable law or stock exchange rule after consultation with
the other parties hereto as is reasonable under the circumstances.
(b) The Primary Purchaser and the Company agree that they
shall remain bound by the terms of the Non Disclosure Agreement dated May
2, 2001, between the Primary Purchaser and the Company.
10.11 Further Assurances. Each party shall execute such
documents and perform such further acts (including obtaining any consents,
exemptions, authorizations or other actions by, or giving any notices to,
or making any filings with, any Governmental Authority or any other Person)
as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed, or
have caused to be executed, this Agreement on the date first written above.
iBEAM BROADCASTING CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
_________________________
Name: Xxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
XXXXXXXX COMMUNICATIONS, LLC
By: /s/ Xxxx X. Xxxxxxxxx, Xx.
_________________________
Name: Xxxx X. Xxxxxxxxx, Xx.
Title: Senior Vice President
XXXXX & COMPANY INCORPORATED
By: /s/ Xxxx X. Xxxxx
_________________________
Name: Xxxx X. Xxxxx
Title: Managing Partner
XXXX iBEAM, LLC
By: /s/ Xxxxxx X. Xxxx
_________________________
Name: Xxxxxx X. Xxxx
Title: Managing Member
